Tashkent, Uzbekistan (UzDaily.com) -- In 2024, the performance of banks in Armenia, Azerbaijan, Georgia, Kazakhstan and Uzbekistan will remain stable, says a new analytical review from S&P Global Ratings.

The agency published a forecast for the banking sector for 2024, covering the countries of Central Asia and the Caucasus.

“We expect bank performance in these countries to remain resilient in 2024. Lending growth will be moderate, and stable asset quality will support profitability and capital levels,” the agency notes.

Agency experts emphasize that favorable economic growth prospects, high demand for loans, especially retail, good financial performance and liquidity, as well as stable profitability will help maintain the credit ratings of banks in this region in 2024. As of February 2024, 80% of bank rating outlooks were rated as “Stable”.

Key risks include a possible sharp downturn in the global economy, increased geopolitical tensions in the region, aggressive growth in retail lending, high exchange rate volatility and a slowdown in the rate of dollarization of the financial system.

Regulation, supervision and corporate governance in the region’s banking sectors are evolving, but remain less effective and predictable than in developed markets, the agency notes.

Banking sector of Uzbekistan

S&P Global Ratings emphasizes that a favorable macroeconomic environment and strong private sector growth will support an increase in corporate lending, especially in the SME segment.

Population growth and increasing disposable income support consumer demand and strong growth in retail lending, including mortgages, auto loans and unsecured consumer loans.

However, given one of the lowest GDP per capita in the region, limited credit growth is expected in Uzbekistan.

The agency predicts that private and public banks will continue to increase the volume of retail lending and lending to small and medium-sized businesses.

Experts emphasize that competition in the banking sector will increase, and banks that actively invest in automation and digitalization will have more opportunities to meet customer needs.

At the same time, the regulator is likely to tighten requirements for retail lending, which could limit its growth.